Breakdown group AA boosts full-year profit expectations

James Booth
Edmund King Talks To the Press As AA Workers Vote For Strike Action
Profit expectations up at AA on strong business-to-business performance (Source: Getty)

Breakdown cover group AA today raised expectations for its full-year profit after retaining or extending its key business contracts.

In a trading update AA said it expects its earnings before interest, tax, depreciation and amortisation (Ebitda) would be not less than £340m, having previously said it expected profit to be in the range of £335m to £345m.

Read more: AA wins multi-million pound-contract to service VW cars

It said it has successfully renewed or extended all its key financial year 2019 business-to-business contracts, including Lloyds Banking Group, Volkswagen Group, Suzuki and Jaguar Land Rover.

AA has also won a three-year contract with van and car leasing company Arval.

Average income earned on each of AA's 13m business customers increased five per cent to £21.

Meanwhile, the roadside repair firm's paid personal memberships slipped two per cent to 3.21m during the year with retention of just over 80 per cent at 31 January.

The company blamed the decline in memberships on regulatory pressure and competitor activity.

But AA plans to increase its marketing spend with the aim of achieving a flat membership base in financial year 2020 and returning to growth by financial year 2021.

Average income per paid member increased three per cent to £162.

Read more: AA hit by injury time stall in promotion quest

In its insurance arm, AA's motor policy book grew 16 per cent to 731,000 and its home policy book grew 1.5 per cent to 830,000.

Average income per motor and home policy fell to £69, which it said reflected investment in new business growth.